1. Technical Field
The present invention relates generally to a method and apparatus for managing bonds. More specifically, the present invention accepts initial information about a municipal bond as well as subsequent information about the bond that is required to be disclosed. The present invention also makes this information available to regulated entities required to access the information, to central locations designated by regulators to receive the information, to the public and to other entities.
2. Description of the Related Art
The issuance, offer and sale of municipal bonds is regulated by federal securities law. These regulations, in part, mandate brokers and dealers transacting in municipal bonds to have reliable access to disclosed material information concerning the bond issuer's financial condition and operation to require bond issuers to provide these disclosures at the time the bonds are issued, and periodically over the lifetime of the bond. In addition, the issuer must disclose certain important events as they occur.
Traditionally, disclosing this information in a satisfactory and coherent manner was difficult, as was accessing information regarding a municipal bond prior to a broker's recommending it to a customer. For some time, the Securities and Exchange Commission (SEC) has required bond issuers to disclose the above-mentioned information to Nationally Recognized Municipal Securities Information Repositories (NRMSIRs), State Information Depositories (“SIDs”), and disclosure information systems established and operated by the Municipal Securities Rulemaking Board (“MSRB Systems,” and, together with NRMSIRs and SIDs “Municipal Disclosure Repositories,” referred to herein as MDRs). MDRs were created by the SEC to serve as points where information could be deposited by issuers and retrieved by interested parties. As a means of preventing fraud in the municipal market, Brokers and Dealers (as those terms are legally defined by the SEC) in municipal securities are required to have access to systems, including Municipal Disclosure Repositories that provide reliable information about municipal issuers and their bonds.
Issuers, however, have had difficulty in fully utilizing NRMSIRs, SIDs and MSRB Systems. Some issuers contend that NRMSIRs are not “user friendly,” and that there is little feedback when incomplete information is accidentally submitted. Further, NRMSIRs do not affirmatively remind issuers when information is due to be submitted. Brokers and Dealers transacting in municipal bonds have had difficulty in meeting regulatory requirements because of uncertainty over the reliability of information available through NRMSIRs. Specifically, whether information required to be filed was, in fact, received by the NRMSIRs and whether the information was received have been difficult to determine. Brokers and Dealers have complained that the information on file at each of four current NRMSIRs is inconsistent and the SEC staff has noted inconsistent filings among NRMSIRs in sample studies. Also, Issuers cannot verify that their disclosure filings have been received and accurately filed with NRMSIRs, SIDs and MSRB Systems. Brokers and Dealers transacting in municipal bonds cannot easily verify the reliability of Municipal Disclosure Repositories. As a result, Brokers and Dealers transacting in municipal bonds cannot with certainty comply with current regulatory mandates.
Thus, a need exists for a system that reliably indicates whether required information with respect to a municipal bond or similar security has or has not been timely filed. This system should allow for the simple, timely, and reliable submission of bond information as required by the SEC. This system should verify, to the extent possible, that all required information has been filed and is contained within an issuer's submitted bond information. The system should then simultaneously “publish” the information by making it available on the Internet. In addition, the system should send the information on to the NRMSIRs, SIDs and MSRB Systems to fulfill the issuers' legal obligations. The system should provide Brokers and Dealers transacting in a municipal bond reasonable assurance that it will receive prompt notice of any event relating to that municipal bond disclosed pursuant to SEC regulation applicable to municipal securities. The system should provide a secure system for the electronic submission, storage, transmission and retrieval of audited financial statements and other information in conformity with professional standards. The system should also provide a secure means for communication among issuers, their agents, and investors, including by electronic mail and teleconferencing. The system should also periodically remind the issuers when new information about their bonds is due.